USDC Evolution: Coinbase Acquires Stake in Circle

22 Aug 2023 by Rory Kejzerko 2 min read

Crypto powerhouses Circle and Coinbase have announced a partnership to bring the issuance and governance of USD Coin ($USDC) in-house.

This has been made possible through the dissolving of Centre Consortium- which previously governed USDC whilst being managed by both firms- and Coinbase acquiring an undisclosed minority share in Circle Internet Financial.

Source: https://www.circle.com/blog/ushering-in-the-next-chapter-for-usdc

Per a blog post on the Circle website:

“The new structure will streamline the operations and governance, and enhance the direct accountability of Circle as the issuer, including holding all the smart contract keys, complying with regulations on governance of reserves and enabling USDC on new blockchains”.

The move also sees USDC- primarily known for its use as an ERC-20 token on the Ethereum blockchain- integrated onto 6 new blockchains between September and October, taking its grand total of blockchain use cases to 15. Although yet to be confirmed, the likes of Polkadot, Near, Optimism, and Cosmos are said to be included on this list, as well as Coinbase’s own ‘Base’ blockchain.

Further, the two companies will continue to earn revenue through the interest gained from their USDC reserves, where following the new arrangement, such money will be shared based on the amounts each platform holds. Any interest acquired from ‘broader distributions and usage of USDC’ will be split equally.

Moving forward, senior figure at Coinbase Phil McDonnell doesn’t see any change in the trajectory of the world’s second-largest stablecoin; that is, it will continue to transcend mere crypto contexts to become a main player in foreign trade and cross-border transactions.

Source: https://www.linkedin.com/in/philipmcdonnell/

Through now issuing and governing the coin in-house, Coinbase and Circle are also said to have ‘even greater strategic and economic alignment’ when its comes to the future of USDC and the stablecoin crypto ecosystem as a whole (dominated by its apex coin USDT Tether), which is nothing but exciting for those hoping for a CBDC averse DeFi future.

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